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Of the state’s 266 economic-development awards that ended in 2012, barely half of the recipients
fulfilled their end of the deal in terms of hiring or other promises, according to a new report
from Attorney General Mike DeWine.

The annual report, issued yesterday, shows a compliance rate by companies of 54.9 percent. This
is down from the previous-year rate of 63.5 percent.

“While the state rightfully encourages growth in business, capital investments and workforce
retention and advancement, it must also be a good steward of taxpayer dollars,” DeWine said in a
statement.

Though the report looks exclusively at companies that did not meet their benchmarks, a majority
of the recipients met or exceeded the goals.

The most notable was JPMorgan Chase & Co., which agreed five years ago to create 1,500 jobs
in Columbus and ended up creating 6,219. The company received an incentive package that included
tax credits and other aid.

Other central Ohio companies that exceeded goals include Thirty-One Gifts of Johnstown and Eddie
Bauer of Groveport, which added 314 and 489 jobs, respectively.

But the percentage of companies that didn’t meet their benchmarks is disturbingly high, said
Robert Greenbaum, a faculty member at the John Glenn School of Public Affairs at Ohio State
University who has studied the effects of government aid.

“The first necessary condition is that the companies that receive (state aid) do what they say
they will do,” he said. If more than a few companies fall short, that reflects poorly on the
companies and the state officials who approved the aid, he said.

One of those companies, NuGrowth Solutions of Columbus, says its hiring has been slowed by a
sputtering economy in 2011 and 2012.

“Our growth is happening, but it’s not happening nearly as fast as we would like,” said Alex
Deak, chief operating officer for the company. “We’re as disappointed as anybody that we didn’t get
there,”

NuGrowth, a digital marketing firm that also sells software to insurance agents, received tax
credits in exchange for a vow to create 88 jobs and retain 31. It ended up creating 14 and
retaining 31 by the end of last year. In response, the Ohio Development Services Agency has
modified the terms of the deal to reflect the diminished performance. The company didn’t receive
any benefits for the jobs that it didn’t create.

Other examples of central Ohio companies that did not meet the contract terms:

• PharmaForce Inc., a maker of generic injectable pharmaceuticals, received a $250,000 grant in
exchange for creating 200 jobs and retaining 80 in New Albany. It ended up creating zero jobs and
retaining 20. The state asked for, and received, $131,500 from the company.

• Westerman Nuclear, a maker of storage tanks for the oil and gas industry, received a tax
credit in exchange for creating 84 jobs in Bremen in Fairfield County. It ended up creating zero
jobs. The state canceled the credits this year after Westerman had been purchased by Worthington
Industries of Columbus.

• Netflix Inc., a video subscription service, received a $25,000 grant in exchange for creating
104 jobs and retaining six in Grove City. It ended up creating 45 jobs and retaining six. The state
asked for, and received, $8,700 from the company.

PharmaForce and Netflix did not reply to requests for comment.

The Westerman credits were for a project that the company canceled because of a sudden drop in
demand for nuclear storage tanks in 2011, said Cathy Lyttle, a Worthington spokeswoman. The drop in
demand followed the Fukushima Daiichi nuclear-plant disaster in Japan that year.

“It’s important to say that there were (no credits) collected or claimed by Westerman Nuclear,”
she said.

Most of the awards in the report were approved in 2010 under former Gov. Ted Strickland, said
Lyn Tolan, chief of policy and communications for the Ohio Development Services Agency.

“A lot of projects approved under the prior administration have a low compliance rate, and it’s
frustrating,” she said. “It does raise questions about whether or not this is a wise use of
taxpayer resources.”

Strickland is a Democrat; Tolan’s boss, Gov. John Kasich, is a Republican.

Dale Butland, spokesman for Innovation Ohio, a liberal research group, said it is “the height of
chutzpah” for the Kasich administration to blame Strickland.

“They can complain all they want about past administrations, but the reality is, we’re 44th in
the nation in job creation, and we were never 44th in the nation in job creation under the previous
governor,” he said.

The larger question for taxpayers should be whether companies receiving aid would have created
those jobs regardless of the incentives, said OSU’s Greenbaum. This is also one of the
most-difficult questions to answer.

“Even if 100 percent of the firms were complying, that doesn’t mean that the program is creating
new jobs,” he said.